EU leaders weighing sanctions against Russia

BRUSSELS - Russia will face sanctions over its military incursion in Ukraine's Crimean peninsula unless it withdraws its troops or engages in credible talks to defuse the situation, European leaders said Thursday.

"We need to send a very clear message to the Russian government that what has happened is unacceptable and should have consequences," British Prime Minister David Cameron said as he arrived at an emergency meeting of the bloc's 28 leaders in Brussels.

But leaders appeared divided between nations close to Russia's borders and some western economic powerhouses — notably Germany — that were taking a more dovish line.

"Whether (sanctions) will come into force depends also on how the diplomatic process progresses," German Chancellor Angela Merkel said, noting that foreign ministers including Secretary of State John Kerry and Russia's Sergey Lavrov were holding talks again in Rome on Thursday.

"Russia today is dangerous," insisted Lithuanian President Dalia Grybauskaite, warning Moscow is seeking to expand its borders. "After Ukraine will be Moldova, and after Moldova will be different countries."

Among initial sanctions Moscow could face are the suspension of talks on visa liberalization and an economic agreement. More drastic steps like asset freezes and travel bans on Russian officials were unlikely to be adopted, not least because of Europe's close economic ties with Russia.

The United States has already suspended talks on an investment treaty and threatened further steps. NATO on Wednesday suspended most of its meetings with Russian officials, halting military co-operation and deciding to review all aspects of its relationship with Moscow.

"We cannot go back to business as usual," Merkel said.

Poland, Lithuania and other eastern European countries closer to Russia's borders pushed for a strong and united EU response including meaningful sanctions, but Germany, the Netherlands and others preferred defusing the crisis through diplomacy without alienating Moscow.

"We should do everything to give the route of de-escalation a chance and if we come to the conclusion today or the next 24, 48, 72 hours that de-escalation is not an option then obviously sanctions are back on the table," Dutch Prime Minister Mark Rutte said.

Russia is Europe's third-largest trading partner and its biggest gas and oil supplier. EU exports to Russia in 2012 totalled 123 billion euros ($170 billion), and European banks have about 200 billion euros in outstanding loans to Russia.

Cameron, Merkel, French President Francois Hollande and Polish Prime Minister Donald Tusk held initial talks to co-ordinate their strategy before the summit. The 28 leaders then opened their meeting with talks with Ukraine's new prime minister, Arseniy Yatsenyuk.

"This is not just the Ukrainian-Russian crisis, this is the crisis in Europe," Yatsenyuk said at a meeting earlier Thursday with European Parliament leaders.

The EU proposed a $15 billion aid package for Ukraine Wednesday. The U.S. has so far pledged $1 billion and is working on a more comprehensive package, in co-ordination with the EU and the International Monetary Fund.

Ukraine's economy is faltering and the country is running out of cash. The government in Kyiv estimates it will need $35 billion in bailout loans for this year and next.

The EU also offered Ukraine a wide-ranging free trade and economic agreement that would draw Kyiv closer to Europe and help boost its economy.

At a protest close to the summit in Brussels, Ukrainian Myroslava Finiw said he wanted the leaders to take tough measures.

"Our expectations are that the European leaders will impose some sorts of sanctions on President (Vladimir) Putin and try and get the message through to him that these sorts of actions are just not acceptable "